Tuesday, 26 January 2016

Mind the Gap

Yesterday I appeared on John Beattie's Radio Scotland show to help "fact check" a couple of the statements made by Nicola Sturgeon during her interview with Andrew Marr (I wrote about it shortly after it was broadcast on Sunday: Marr Fails to Grill Sturgeon.).

The other person on the line from the studio in Bath was Stuart Campbell, custodian of Wings Over Scotland and a crowd-funded SNP apologist. If you're just interested in the facts you can skip the next section.

I recognise the term "crowd-funded SNP apologist" may seem rather dismissive. I use it only because during the broadcast Stuart referred to me as "some dog food salesman". It was a predictable attempt by him to deflect from the point being discussed by getting a rise out of me and I wasn't going to waste valuable airtime by biting.In his rapid-rebuttal blog post immediately after the interview he refers to me as "an amateur blogger with a keen interest in Pedigree Chum". Quite why the fact that I'm an "amateur" blogger (translation: runs real businesses and does this in their spare time) is considered relevant I don't know. He's a "professional blogger" which presumably means he'll have the time to be far more informed and better researched than I am ...Oh and the business of mine he's referring to? It doesn't sell Pedigree Chum - but then Stuart never has been overly bothered about factual accuracy
You can listen to the part of the broadcast I participated in here. It was an interesting debate (do listen if you have time, the segment was about 15 minutes long).

The conclusion on question one was pretty unequivocal. The statement made by Sturgeon that we were testing was:

the projections the Scottish Government made were in-line with [chuckle] all [/chuckle] external projections for prices and for revenues …

This statement was shown to be false.

Stuart from Bath asserted that the statement was in fact true because the price assumptions used were in line with (among others) the OBR. Unfortunately - despite being a "professional" blogger invited on to comment on this specific question - Stuart appeared not to know what the revenue forecasts he was defending actually were.

I observed that at the time of writing the White Paper the £7.9bn oil revenue assumption the Scottish Government used for 2016-17 was £5bn higher than the £2.9bn the OBR were forecasting at the time. I suggested that it was therefore clearly incorrect to suggest that the SG forecast was in-line with all external projections for prices and revenues.

[I also pointed out that they weren't even in line with the OBR on price - at the time of the white paper the OBR were forecasting $97 versus the SG's $113 - but that was beside the central point.]

The main point of disagreement is the different forecasts for revenues from North Sea oil and gas used. Our figures and the Treasury’s figures are based on the Office for Budget Responsibility’s projections. The Scottish Government report instead uses their own – higher – forecasts for North Sea revenues.

Stuart countered with some predictable ad hom against me and accused me of "obsessing with the OBR's projections" as opposed to "everyone else". Unfortunately he wasn't able to cite a single alternative oil revenue forecast made by anyone else to back up his assertion. At the time of writing he has still not (either on twitter or his blog) been able to cite a single alternative forecast that would back up the statement.

I've checked the SNP's website - they're famed for the speed of their rebuttals but I see nothing there to support the FM's assertion.

We've established that the £7.9bn forecast was not in-line with the OBR and that the OBR (who are relied on by HMRC and the IFS among others) is a very significant "external forecaster".

So the statement about being in-line with all external forecasters when related to revenue forecasts in the White Paper is demonstrably false.

What interests me now is: were they actually in-line with any credible external forecasters when it came to forecasting North Sea Oil revenue generation in 2016-17? I'm sure they'll be able to dig out some from somewhere, but the fact that they haven't been able to yet speaks volumes.

For completeness: the second point under debate was something I agreed was - as narrowly stated - true because it was a truism. Sturgeon said.

Well, I've said our growth in onshore revenues over the next few years is projected to [chuckle] significantly [/chuckle] outstrip the decline in offshore revenues ...

As I pointed out - if you're flexible enough in your interpretation of a "few years" to include 8-10 years - then of course underlying GDP growth will eventually replace lost oil revenues. The point I attempted to make was that if you have to use all of the GDP growth over the next 8-10 years merely to plug the gap left by oil you can't use that GDP growth to invest in public spending. A corollary of this is that the fiscal gap that exists between us an the rest of the UK - widely referred to as the "black hole" - wouldn't be closed because of course the UK's GDP is also growing.

Stuart suggests that because I accepted Sturgeon's statement was a truism this somehow represented (I'm directly quoting his subsequent blog post here)

"categorical agreement from the Yes and No sides alike that actually the falling oil price makes an independent Scotland MORE economically viable, not less"

I mean this is really desperate stuff.

He justifies this because he quoted an unrelated BBC report (which I've now found here) which did indeed say:

The Scottish economy will continue to pick up pace, despite the lower oil price having an adverse impact on the oil and gas industry.

The Fraser of Allander Institute's regular forecast shows the boost to oil users in Scotland outweighs the harm to North Sea producers

It turns out that report was dated March 2015 (so nearly a year out of date) and also stated

The University of Strathclyde institute's report's conclusions run counter to the view of the Bank of England governor, Mark Carney.

He said he expected the UK economy to be helped by lower oil prices, while the Scottish economy would not be

So I've had a quick check to see what the Fraser of Allander Institute are actually saying now (rather than nearly a year ago). I confess I've only skim-read their latest Economic Commentary but I can't find anything in there that backs the assertion Stuart makes. Here are some highlights that caught my eye;

For 2016, we have also revised down our forecast to 2.2% from 2.3% in June, in recognition that the slow down in the rate of recovery will continue into 2016 as exporting continues to be difficult due to the high pound sterling and because of the lingering effects on Scottish onshore activity of the low price of oil.[..]As noted below, the effect of the slowdown in the oil & gas industry due to the low price of oil is also affecting the service sector in Scotland much more than the UK, for obvious reasons. And that is one contributory factor to Scotland’s weaker service sector performance recorded here[..]In Scotland, weakness in the service sector has been affected by the onshore implications of the fall in the price of oil hitting business services in particular as well as mining and quarrying.[..]The Survey also reveals the impact that the low global market price for Brent crude oil is continuing to have on the Scottish economy, with the performance of oil and gas service businesses dampening results in the Financial and Business Services sector.[..]Domestic demand in Scotland and the UK continues to be boosted by low inflation, helped by the fall in the price of oil and some other commodity prices, with the fall in the oil price being key, further boosted by the low price of imports due to the strength of sterling

So whilst there's recognition that there is a positive demand boosting aspect to the fall in oil price, I see nothing there to suggest that it makes "an independent Scotland more economically viable".

The rather obvious point here is that from the low point of now (with oil revenue this year estimated to be only £0.1bn) the economy boosting effects of lower oil price may be net positive - but relative to the indyref case that was presented (assuming £7.9bn annual oil revenue) it's frankly preposterous to argue that the chronic decline in the North Sea oil industry makes "an independent Scotland more viable"

45 comments:

The OBR's Economic and Fiscal Outlook 2012 contains this interesting paragraph "The futures market suggests that oil prices will remain higher throughout the forecast period than we assumed in November, but that they will fall back more quickly than expected previously to $95 per barrel in 2016."Now I know, Kevin, that you are always quick to warn that oil prices should not be confused with revenues but even you must see that if the OBR was basing its revenue figures on $95 per barrel in 2012 it must have come up with far higher revenue estimates than today's revenue figures with Brent Crude at around $30. I can't help thinking that Sturgeon and your old sparring partner Mr Campbell are broadly correct in pointing out that, generally, most (if not all) experts were predicting far higher oil revenues in 2016 than we are seeing today and that Campbell is also correct in his firmly held assertion that accurately predicting oil prices in years to come is nearly impossible.

Kevin, quite by chance, I heard the interview with you and Campbell on a clip on Campbell's website, Wings over Scotland. It was obvious that there was a fair amount of obfuscation from Campbell, and a great deal of ad hominem comment. I thought this was rather pathetic coming from a Scottish economic refugee living in rUK. The first question was a technical no-brainer. Campbell couldn't come up with a half-ways decent rebuttal. But I was interested in his sensitivity about the issue, and what appears to be that of the Scottish Government. Presumably, the sensitivity arises because if one was caught lying once on such a major issue, future White papers on Independence will be treated with caution verging on derision. I thought the contest between you and Campbell on the second topic was more evenly balanced; not because Campbell had suddenly acquired lucidity, but because the argument is subtle and cannot easily be got across. But subtlety, or rather its lack, will be the problem for Swinney and Sturgeon when they try and explain why they are chickening out of implementing the Scotland Bill. Because, make no mistake, that is where their rhetoric is going.

The sounds coming from Swinney and Sturgeon suggest that, fundamentally, they want the population-based Barnett formula to be replaced/modified with something that compensates Scotland for any relative decline in population. Under the current Barnett formula, there is no compensation, and any decline in Scottish population relative to rUK would result in a lower block grant. My guess is that the UK Treasury is resisting the concession, not least because the Smith Commission, to which Sturgeon was a signatory, speaks of the Barnett formula as being the starting point for the fiscal adjustment following devolution in the Scotland. My current guess is that Treasury will stand firm on the population principle, since to do otherwise would be unfair to rUK. Thus, we have Swinney and Sturgeon threatening to halt implementation of the Scotland Bill on the grounds that it doesn't compensate Scotland enough, when their preferred policy is to dump the Barnett formula, and impose an approximately 12% cut in Scottish Government revenues. It may be that the SNP is actually too chicken to proceed with tax devolution.

So 24 hours later you have come up with your 'response. You were reading from your prepared blog yesterday. He generalised. You used your 'specifics' - a barrage of out of date meaningless figures - the one argument you have.

This is so tedious. You are never going to persuade anyone after they heard you yesterday. All you could come up with was 'read my blog' between snickering like a nervous wee schoolboy and trying to interrupt and bluster your way over him speaking. Those public speaking courses are not really value for money are they?

It has been quite eye opening to see the abuse that you have had to put up with on Twitter and it is depressing that the 'Yes' movement is turning from 'civic Nationalism' to out and out Nationalist... Orwell's 'Notes on Nationalism' could almost be a case study of Campbell and his followers. The 'Yes' movement is being lost to those with the most aggressive and intolerant views with more moderate voices like Bella also being traduced and drowned out in recent weeks.

I hear the counter argument that Wings has to put up with abuse as well but the big difference, between you and him, is that he is a 'professional' blogger that pulls in 100's of thousands pounds of crowdfunded money. whilst that does not excuse some of the more virulent abuse he gets it is hard to play the victim when your whole modus operandi is to traduce opponents and ad hom attacks.

You will probably never know just how much people appreciate what you do, so keep going Kev as there are many many 'anonymous' people like me, who greatly value your work but are too scared to put their heads above the parapet.

I saw your comments yesterday about your wife literally in tears because of the abuse you get on Twitter and also some of the stuff that was hurled your way. You may want to keep your own blog relatively sane, and away from the madness that is Twitter. Feel free not to post this comment in that case.

Your wife is a very sensible woman. It really isn't worth the - literal - grief. Unfortunately, Twitter is populated by people who demand attention and think they are due respect simply by saying nasty things about their fellow commentators. Although the stuff yesterday was particularly vile, you are one of many in seeing your deeply considered contributions trashed and your motives dishonoured. Even Twitter realise there is a problem.

My suggestion is don't try to win the argument for every ill-informed post. It's too draining. If you feel like it, have your say and get out. Intelligent and open minded people will think about it; the others won't.

I can't remember if I have done this, but I want to say a thank-you for the chokkablog series. I cam across your blog before the referendum when you were just about alone in flagging up the fiscal gap. I have to say, you have been completely validated since.

Yes, no one predicted correctly. The whole point is that the SNP used their own figures, of which their most pessimistic scenario was £5bn higher than the OBR's prediction. Bear in mind that the OBR is the most reliable source of figures for oil revenues, and itself is often optimistic.The Scottish Government should necessarily have based its figures on the OBRs. That it did not do so shows that it was deliberately misleading the public.

It also shows the interesting strategy of nationalists and wings over Scotland. By trashing the validity of sources such as the OBR in the eyes of their supporters, they are given a tool by which they can knock down any valid economic argument for the union, thus continue to mislead their supporters. It really is tragic/funny to watch.

Also in an article at the end of 2013, the Financial Times reminds us of the OBR's own caveats in relation to its predictions "The OBR has itself stressed that forecasting oil revenues is notoriously difficult given the complex interplay of production levels, energy prices and capital investment by companies." It strikes me, therefore, that this has become something of a false debate. On top of the wide error margins built into these calculations, the calculations themselves are based on making assumptions about many geo-political imponderables.

In March 2014, the OBR published its forecast for 2016/17, stating $97pb.

This figure was widely accepted.

So the question has to be asked: Where did $113pb (White Paper assumption) arise? More importantly, if the OBR are deemed to be over-optimistic, how irresponsible is it for a movement such as Yes/SNP to attempt to drastically over-sell the situation by citing a much higher figure?

More importantly (and this for me is damning)- not a month after the OBR published their figures of $97pb, they revised them dramatically to allow for the downturn. We know they weren't wrong on the direction.

So, at what point after this change did Yes/SNP announce a correction? The Yes campaign OWNED social media during the run up. How easy would it have been to communicate any change?

What did they do? Nothing. Hands up how many of you knew about the sharp dip in projection? Not many of you, because they didn't want you to know. You were too busy talking about 'secret oil fields' and perpetuating Yes/SNP lies about how much we pay in vs how much we receive, when GERS spells it out for you year on year.

What's ultimately embarrassing for me as a Scottish resident, is reading comments such as the ones above, is testament to how far some folk will ride the confirmation bias train.

Mr Hague offers anyone the chance to refute the figures he quotes on his blog/twitter, with the eagerness to change where wrong (I hope he doesn't mind me stating this once again).

I would invite you to do the same for Mr Campbell and challenge the data he presents. I can guarantee you will not receive the same welcome by challenging his data.

a) He doesn't have a job.b) He needed to act quickly to appease his sheep (eg you) and put a big a spin on the car-crash performance he gave.

It's nice to see you have such an interest in Mr Campbell. Can you please ask him why he's changed his tune over oil being a bonus, when 3-4 years ago he described the situation of no oil as leaving a 'huge financial hole' in Scotland?

Grendal, you are correct that the OBR added these rather important caveats to their predictions. However, this rather fundamentally undermines the claims in the White Paper regarding oil revenue projections. A properly conceived White Paper - one that honestly reviewed the opportunities and risks of an independent Scotland, rather than the blatantly biassed document that it was - would have included the same caveats as the OBR. Given how unpredictable the oil price is, why did the White Paper include only two generous scenarios?

Grendal, You seem rather desperate to try to trash Kevin and yet Support Wings and are clutching at any pitifully tenuous straw you can find to help you that you can rake up from the past on the Internet.

1: Kevin wasn't the only one to criticise the fact that the SNP were more than reckless to ignore the OBR figures and choose ones than were excessively higher. This respected and well qualified Economist's blog post spotted and exposed excactly the same points. Pay attention to what he says about the SNP's own chosen figures and its decision to ignore those of the IFS and the OBR. Pay attention too on his comments on Wings "Wee Blue Book" and in the comments sections lower down the oter false assertions of "Newsnet Scotland" which is just another "Wings" wannabe clone website,see the link below.(His warnings were stop on weren't they)http://mainlymacro.blogspot.co.uk/2014/09/scotland-and-snp-fooling-yourselves-and.html

2: Go to Kevins Blog and near the Top Right hand side corner there is a big red button labelled "Endorsements" click on that and look on the page at all the feedback from respected economists and other people working in the financial industry,,there are even recommendations from well known "YES" supporters that Kevin is trustworthy and the Data presented is good. The majority of these people are all traceable on the Internet ,will be found to be respected and clearly are happy to risk their own reputions on backing Kevin's Data. Can you point us to the same level of support from respected people directly involved in Finance on Wings Website ? Now why should that be ?

3: The best place you can see the timeline of the OBR revising its own figures and what the SNP chose to do on the Indy "White Paper" is here. Nowhere on this presentation will you hear the words "We could not be Independent" in fact not only on this presentation but you won't find those words anywhere on Kevins blogs, all he does is present the data Honestly which the SNP and their supporter are simply not doing and never have done. Watching these videos are likely to the the best 40 minutes learning you will have spent for some time on "SNP facts" and afterwards how you intrepret them is your own choice. Don't accuse Kevin of misleading facts when you can see the same things on the White Paper for yourself...get a copy and look. See the Videos on this link http://chokkablog.blogspot.co.uk/2015/07/chokkablog-videos.html

“Campbell is also correct in his firmly held assertion that accurately predicting oil prices in years to come is nearly impossible.”

And yet, with that “firmly held” belief, he was quite happy to accept an economic projection heavily based - whatever he and the nationalist camp say now - on predictions of high oil prices and revenues. If he really believes that, he's quite right (not something I'll readily admit about Campbell), but surely anyone who really does would have taken one look at “Scotland's Future” and concluded, as I did, that the whole thing was wishful thinking of the first water.

Furthermore, while few economists may have predicted such a marked decline, it was obvious to anyone paying attention, not least to the drive in the US to reduce their dependence on foreign sources, dating back to the 2008 presidential election at the latest - that the high prices of three or four years ago were, at the very least, under threat. It would have been reasonable to argue that it would come to nothing, but it was willful ignorance to pretend it wasn't happening.

(Far be it from me to suggest that this kind of self-obsessed navel-gazing while ignoring what's going on in the rest of the world is absolutely bloody typical of not just the nationalists, but most of the Scottish political class...)

“it is depressing that the 'Yes' movement is turning from 'civic Nationalism' to out and out Nationalist.”

Oh, that happened at least two years ago. My impression now is that the “civic nationalism” thing was always more about convincing themselves that they weren't on the same train as the destructive nationalist movements of the 20th Century (remember that the SNP boarded that train in 1934, slap-bang in the middle of the last global bout of nationalist fervour) as the rest of us.

Your point, and it's the same point that Campbell makes repeatedly, is that no-one can forecast the future price of oil to any degree. If we accept that, and it's a fair point given that you could make billions on the oil futures market if you could, then the immediate question arises: How do you manage public spending with such a variable?

If oil price cannot be predicted, then oil revenue cannot be predicted. If revenue cannot be predicted you have two choices as a Scottish chancellor. (1) Borrow when low, and hope (yes, hope because there's no guarantee as you've just pointed out) that revenue will rebound. (2) Assume all oil revenue is a 'wee bonus' to be spent/saved only after it is booked and budget accordingly.

SNP rhetoric is that oil revenue is a 'wee bonus', so it would seem fair to me that any future independence white paper starts with an assumption of zero oil revenue, then explains the consequences of this assumption, which are amply documented in this blog. Any assumed revenue higher than zero would be in fact counter to your argument, since there are clearly years like now where revenue will be zero.

One further point I'd like to make to Kevin...I think you did excellently on the radio, and in no way do I think I would do as well. I have one constructive criticism, I hope: I think the point about the revenue gap being eventually filled could have been countered better by saying that yes, eventually onshore revenue will grow to the same level as that forecast in the white paper, but at the same time spending on schools, the NHS etc will also grow, so it doesn't mean much to look at revenue without looking at spending. In fact, it's of a piece with SNP arguments that talk about GDP without ever mentioning spending.

But overall, bravo to you Kevin for bringing facts into the debate, and also showing Campbell to be the odious bully that he is.

It is amazing and terrifying that those in support of WoS can't see that by failing to name even one other similar forecast of REVENUE that the argument on the actual question being discussed was lost. I fear for Scotland's future if this is the level of intellect that is driving us. While I have no doubt Scotland can be an independent nation its not one that I find appealing in any shape or form.

The absolute mithering hypocrisy of you Mr Hague. You get free rein to present your blog of opinion dressed up as 'fact' at the BBC. Yet you still manage to make a piss poor mess of it.

You then, having written a blog accusing SNP voters of having lost their wits via NLP, take umbrage at the criticism rightly coming your way.

Your wife, apparently unaware of what you get up to on the internet, is 'in tears' at the hideousness of it all. You then claim it's because you write about economics. It is not, it is because you seek to belittle those who disagree with you and claim you don't. Your pious moaning is compounded by those around you. Now they are shuddering and clutching their pearls in faux outrage that being called mentally ill is the worst thing ever.

Have you ever seen Maggie Vaughan or Jill Stephenson's timeline and how they use 'mental illness' to insult anyone who disagrees with them? Constantly telling people they need their medication. They are your people Mr Hague. And as for Brian Spanner, well is there really anyone as disgusting as him on the Yes side? Yet his obscene pictures and utterances are indulged and encouraged by you and your 'crowd'.

D. Green, I have similar thoughts about the position SG is implying regardng the Barnett co-efficient based on projected population growth in particular.The Barnett formula as we know is set at the spending review, current co-efficient is 9.85% as at end of 2015.The next spending review is due late 2020.Our FM makes great play in saying it has to get consent via Holyrood, but what is never mentioned is the requirement to get the Scotland Bill voted through at Westminster.I am certain any attempt to change the principle of the Barnett formula may well met stiff opposition as it would appear to be, IMO, a "detriment" to UK. If Scotland were to get a Barnett alteration I would assume Wales and Northern Ireland would expect the same.However this is supposition as none of us is party to the behind closed doors negotiatons, which is a pity.

On the Oil revenue forecasts, I will have to reacquaint myself with BfS and N-56.

I know less about oil prices than you experts but to say, say in 2012-13, there was universal agreement that oil prices (and presumably revenues) were going to plummet is simply untrue. Yes, some were predicting a fall and these were well documented in the UK's media as referendum day approached. By the way, very few of these articles included the wide margins for error or the assumption caveats that some of you are suggesting from the No camp. My recollection of the period was that,on the figures which were available, the Yes camp highlighted predictions which suited its argument and the No camp highlighted those that suited its. OPEC was telling the world that it expected oil to sit around $110 till about 2020 and then climb to $160 by 2035. The UK's department of Energy and Climate Change was predicting steady growth from $110 to $135 by 2030, albeit with wide error margins, though none dropping below $80 by 2025 and certainly nothing near the $30 we see today.All I am saying is that making accurate predictions on oil prices and revenues is impossible and, in this case, pots and kettles should behave with a bit more humility.

KevinKeep posting your factual analysis. I despair when I read much of what passes to be informed opinion. Having listened to the broadcast we once again see a pro-indi cheerleader who refuses to get bogged down in facts but takes refuge in generalities which can never be proven to be incorrect.You are doing Scotland a great service in bringing visibility to the real economic and budgetary issues.Martin's point is spot on - we can grow our revenues but our expenditure will no dount grow at a similar rate so the 'oil gap' will continue to exist and not be eliminated over time - unless of course Ms Sturgeon in proposing freezing public spending.Sad to see the lunatics play the man as usual but rest assured you are a voice of reason and courage amongst the broadcasting fearties who appear to back off from challenging the SNPs grasp of economics.

If as in the white paper these predicted revenues were to form 15% of the budget of an independent Scotland, they had better be right, or not be included at all. To get it so wrong should not pass without comment; whether it be down to incompetence or an attempt to deliberately mislead (and going by the £5bn difference from OBR figures it sounds like the latter).

Pluck out the beam, old thing. The disgusting inflammatory rantings of WoS and his acolytes have long ago plumbed depths that Kevin has (and I hope never will) ever manage to reach. In fact, given the sheer knob-headedness of most of his critics, I reckon he has maintained an admirable level of civility throughout. Rocoham.

The Taxpayers Alliance puts the real UK debt at approximately £9 trillion.The UK government oversaw the biggest financial meltdown ever.The next meltdown is just around the corner.The " broad shoulders " of the UK will compensate for any damage done by low oil prices, according to the pre referendum utterances of the NO campaign.

As has been pointed out many times before, it doesn't matter who else got anything wrong. It was the SNP who were betting the future of an entire nation on the revenues expected from oil. So it was criminally irresponsible of them not to model at least one worst-case price/revenue scenario that was not irresponsibly optimistic. As it was, the forecasts they chose were High, Higher and Lottoland, and on a continuous upward trend at that. The actual downward trend in oil prices was apparent well before the referendum, as the ever less optimistic OBR forecasts reflected at the time, but the SNP never hinted to the electorate that anything less than their confident predictions was possible, let alone increasingly likely. Just disgraceful con artists. Rocoham

In the UK we cannot understand the appeal of "noddy" Sturgeon for the Scots. The SNP do not seem to have any policies apart from free university and getting rid of 8000 Trident jobs.All of us were hoping for a yes vote, that would have been marvellous seeing Sturgeon and Mr Smug explain away the collapse in the oil price and deal with being a Euro currency nation.But, damn it , you voted No.Next time you should insist that the whole of the UK get a vote in the referendum, I guarantee a yes vote.

Reluctant though I am to say this, mauling the Scottish White Paper on independence is probably producing diminishing returns. After all, the Yes side lost. The aim surely has to be to hold future White Papers, and the SNP to better account when they try the same trick again.

This morning, we have Swinney bleating that he won't sign off on the Scotland Bill without the adjustment to the Barnett formula that he wants. It is an open secret that he wants per-capita indexed deduction, a modification that removes the risk of slower population growth in Scotland reducing the block grant over time. Implicit in Swinney's moaning is his view that the Barnett money is the sum needed to give "the Scottish government the capability to create a fair and prosperous Scotland, and the ability to use the powers we have in an effective way." So we now have the SNP getting close to telling us the sum needed from rUK to keep Scotland in the pampered state it has become used to; about £8 billion a year. So the task for those interested in maintaing the Union is to agree with Stuart Campbell that oil is too unpredictable in price for anyone but an idiot to bank on, and for the SNP to develop an honest White Paper that addresses the £8 billion shortfall caused by withdrawal of Barnett money upon independence. If it was honest, the White Paper wouldn't look pretty, as Alex Bell has already pointed out. But we are told, in the South, that Swinney would rather live in a cave and be independent that to build a shared polity within the UK.

For rUK, Barnett amounts to a welfare payment of about £1500 for every man, woman and child in Scotland. Given the ratio of populations, that means every man, woman and child in rUK is divvying up about £150 each a year, or about £600 for each nuclear family of four. If withheld and targeted at lower income rUK families, it could produce benefits of >£1000 per rUK family per year. An obvious way of addressing austerity. The puzzle increasingly is why rUK doesn't want these benefits. The answer has to be that it suits both Labour and Conservatives not to want them. It suits Labour because it is Danegeld that it hopes will buy back Scottish Labour votes in the longer term. I personally think this is a pathetic and unlikely prospect, but without those Scottish MPs, Labour is doomed to opposition for a long time. rUK also suspects that were Labour interested in buying the votes in, courtesy of an alliance with the SNP, the cost would go up and up. For the Conservatives, it is probably 70% Trident and the inconvenience of moving it, 20% loss of status for Great Britain, and 10% sentimental attachment to the Union. The rUK electorate may yet tire of both policies and decide the Scots are not worth the candle. Sticking it to the Scots might yet become an English political sport!

"You get free rein to present your blog of opinion dressed up as 'fact' at the BBC"

Go on then - name ONE thing mentioned on the JB programme which Kev said which was not a fact.

You can't, because you know it not to be true. Instead, you do what every other Nat does. You attack the person. It's desperate stuff, really. Even Mr Campbell had nothing to counter the facts with except digs at Mr Hague.

"it is because you seek to belittle those who disagree with you and claim you don't"

You're doing just that right now, only you're too blind/stupid/ignorant to see it.

"Your pious moaning is compounded by those around you. Now they are shuddering and clutching their pearls in faux outrage that being called mentally ill is the worst thing ever."

See?

I was going to ignore your post at first, but I think you deserve a reply at least from someone.

You are what's bad about this Country.

You lack the ability to debate rationally. You would prefer to attack personally than discuss true facts, because you can't bring yourself to deal with the reality that the facts are.... well, facts. You are in constant denial over the lies you were told by the likes of WoS, the white paper, other nats. Deep down you KNOW you cannot dispute the data offered on this blog. Therefore you attack what's left - the person. No wonder so many of us remain anonymous, if this is the way you feel you're entitled to behave.

Bingo! A big chunk - really, 50%, give or take - of the Scottish electorate has been utterly blinded by nationalism, and I believe that there is no way to break them out of their psychosis than to give it to them good and hard - which means either FFA or independence. Indeed, I wrote to the PM's office immediately after the General Election saying that he should ram FFA down the SNP's throat and stand back and watch them twist in the wind. If he had done this, the Scottish economy would currently be at the starting gate of the deepest recession ever experienced in this part of the world, and he would have been able to say to the Scottish electorate, 'Well, YOU voted for it!'. But, alas, he did not take up my suggestion, leaving the SNP free to continue their unceasing fomentation of grievance and poisoning of Scottish public discourse.

I also wrote to the PM suggesting that he include a referendum on the same day as the Scottish elections this year, asking whether the Scottish people wished Trident to remain at Faslane, and moving it to Milford Haven - which the Welsh Government has said it would gladly host - in the event that it was rejected. Again, my suggestion went unheeded.

In short, I am pretty frustrated with the feeble way Mr Cameron has dealt with the SNP - I am pretty sure that Mrs Thatcher or Winston Churchill, for example, would have immediately seen with absolute clarity the maliciousness of these people, and would have socked it to them accordingly.

Please stick at this. I find you to be pretty inspirational. Indeed (and without wishing to embarrass you) whoever is running the 'No' campaign next time (and I am pretty sure there will be a 'next' time) should tap you to undertake a formal role - eg, business czar, or something. (I also think, incidentally, they should tap Angus Deaton, Niall Ferguson and JK Rowling (if she'd be up for it), and deciding from the off to run an ultra-positive campaign, which should have been done last time. But that's for the future.)

To those of you posting abuse on this site please note that the supporters of Kev find them pathetic and a sorry reflection of SNP supporters. Remember the truism 'All political careers end in tears' when the the time comes to the SNP leadership very few will regret their exit from the stage. Their legacy when they grow old and reflect will be harshly judged

Was that "the biggest financial meltdown ever"? Then I would say, since we have not seen mass poverty and unemployment like in the 1920s, I think the UK government must have overseen it quite capably.MD

The point we are not addressing is what SNP sold to the people of Scotland, the oil wealth as an assured source of income to stand alone. They claimed we are better off on our own under the guidance of socialists whilst selling the notion of wealth, the nation's oil to support the cause. Apparently, oil would solve all our problems, the revenues sustaining a nation's new path. Now, we all see the potential complete failure of our economy under the SNP who sold us 'the best case scenario' and not the 'reality' which has suddenly descended upon the oil industry, and the great source of Scottish Government revenue has evaporated. The disgraceful performance of the SNP to present a 'Utopia' financed by oil followed by rhetorical lies about the economy will be revealed in time. And what of the people of Scotland who followed the SNP narrative? How do they extract themselves from the creation of a 3rd world nation, compliments of the SNP Nationalists?

So, where are we now? The question to ask is how the SNP would manage the economy without the equivalent of the Barnet Formula (which is essentially a subsidy of our governments revenue)?

What happened to the collective culture in Scotland where we stood together as people of the whole of the UK, the whole of the UK, I emphasise? The notion that collective rebellion by socialists will offer our nation a future of prosperity, health and 'power of the people' is a delusion which the SNP use in the same way a whore sells untruths with the promise of sincerity.

Why do we not have a champion to change the course, to explain the truth? Are Scots afraid to speak and confront the left wing? 70 years ago we supported conservatism. Gradually, the Unions changed our culture from one of workers competing with the world to a people who are unable to attract foreign investment because of our unwillingness to accept the passing of our great industries, steel production, coal mining, oil decline. Our response: strike and blame the english (westminster) instead of recognising or understanding the need to work harder than the rest of the world to succeed. The sadness is that SNP look to Nationalists in Ireland to further their claim for potential success whilst ignoring the failings of socialism throughout the world. SNP, would impoverish all of us by extracting power from Westminster and delivering the exchequer to their hands.

Who truly believes we need to exist as a small nation instead of a strong union sustained by the collective power of our combined nations. Scotland, succeeds well within the larger UK order, collectively benefitting from economic growth, and collectively fighting troubled times such as the decline of oil which currently affects 250,000 people throughout the UK. Aberdeenshire, the great source of SNP's wealth may die!

@ Anonymous 17:59Yes, I well remember the disasters of Upper Clyde Shipbuilders and Linwood. Too often Scottish workers have been left jobless by a combination of aggressively uncooperative trade union leaders, poor (and intimidated) management, lack of awareness of the threat of foreign competition, low productivity, poor quality control, late product delivery and complacent indolence on their own part.

The decline of Scottish industry is lazily blamed on Thatcher and the hated Westminster (i.e. English), but in reality the rot set in after 1940, with the widespread nationalisation or state control of key industries, which convinced workers they were guaranteed jobs for life and they did not need to adapt, change or modernise.

When added to the failure to modernise old working practices, lack of investment in capital tooling and infrastructure, and a desire to maintain large but unproductive workforces the eventual outcome was predictable by the mid-1960s. One can hardly blame the banks (the other popular culprit) for refusing to lend or invest in these economically declining and unviable 'businesses'.

Indeed, some economists predicted the extinction of traditional industries in the 1960s. Thatcher certainly should have handled change much better, but the failure of old industries was not hers, but that of Scottish workers and managers, who both preferred to blame 'the English' for deindustrialisation, ignoring the fact that exactly the same decline happened south of the border for identical reasons.

The SNP and Scottish Labour both ultimately subscribe to a form of fantasy aspiration and corporatism culture where the state will create and protect jobs regardless of the cost, as a form of dependency welfare. Until ordinary Scots start to wake up and appreciate that the 1940-1975 era is dead and can never be resurrected, they will go on supporting intellectually immature political parties that prefer to spout unrealistic promises and advocate easy solutions (unlimited oil, socialism, independence) as a catch-all panacea for much more profound underlying difficulties.

And when their fantasies fail to come true they will blame the English and say they have been defeated by conspiracies. Sadly I fear that it is a Scots national characteristic to have exaggerated expectations of success and then when that is not achieved to blame everyone except themselves.

Hello all, I thought that Kevin Hague did a great job on Radio Scotland the other day. The same can't be said of the Rev Stuart Campbell, (Is he a real Reverend?) He just seemed to struggle throughout the interview. His final reply was brilliant. Kevin Hague had given a long factual reply & when John Beattie asked Reverend Campbell for his reply all Reverend Campbell said was that he had blanked out during Kevin Hague's rant. Superb reply Mr. Reverend!

Hello all, I thought that Kevin Hague did a great job on Radio Scotland the other day. The same can't be said of the Rev Stuart Campbell, (Is he a real Reverend?) He just seemed to struggle. With no facts or figures other than Brian Ashcroft saying so, he really came across wanting. The Reverend's best comment was when he was asked to reply to a factually correct comment from Kevin Hague and all he could say that he tuned out during Kevin's rant. Brilliant stuff from the Reverend!

Hello Gordon1977, Great words. My thoughts exactly. I have worked in engineering for over 20 years and just about everybody blames the Tories or Westminster for the decline in Scottish engineering. Also the wish for Labour to return to it's working class roots has never materialised because the world has moved on, but quite a few people think they will go back to the good old days. Very brave of you to speak up.

To Caius Marrius. I cannot answer for David Cameron, but there are good reasons why FFA wouldn't have been pursued by the Westminster government at the time. First, I think that rUK genuinely wanted to keep the Union going, with as little change as possible. No central government likes losing too much control. Second, FFA is a fairly radical devolution, and arguably untried in its extent. It had obvious upsides for Scotland (perhaps too many) if everything worked out OK, but it was entirely appropriate for the Westminster government to conclude that the downside risks were much greater than the SNP had considered. Unfortunately, the toxicity of the Conservative brand meant that any attempt to enlighten the Scottish electorate would have been marketed adversely, as indeed it was in Project Fear. This difficulty would have dictated caution, since it is not in the interests of rUK to have an economic basket case on its northern border. Third, the Westminster government would not have wished to seem to be a pushover when it came to SNP demands, and it certainly wouldn't want to give the SNP anything to crow about. Fourth, the Westminster government might well have thought that, in the long run, oil economies are cursed by oil, but that doesn't stop them having bursts of good weather. The prospect of Salmond getting lucky and running around Europe as if he had just won a lottery would be asking for too much forbearance. Better to give away as little as possible.

However, things change (or rather, they don't change on the SNP side). This morning's news suggest breakdown is looming on the Fiscal Framework, and a war of words is developing on financial support for Aberdeen. From an rUK point-of-view, the SNP's obsession with"'the Tories" disguises the fact that the current Westminster government is the preferred choice of the English electorate by quite a wide margin, like it or not. If we had proportional representation, the Conservatives would still lead the Government, but in coalition with the disaffected Labour votes in UKIP (4 million - far more than voted SNP). The current rUK government's political colour isn't a mistake and it won't go away quickly. Constantly ridiculing it, demonising it, asking it to cough up endless cash for Scottish projects with no end in sight will eventually cause the worm to turn on the rUK side. The next phase may start sooner than we think.

David and Caius, just to add that Scotland didn't vote for FFA, any more than it did for independence. So Westminster would have been doing a lot of people who voted to stay in the union a huge injustice to impose FFA on them unilaterally. However, were I PM I would certainly make a pre-separation "trial period" of five years' FFA one legal condition (among others) to any future referendum on independence, with the Scottish government of the day obliged to publish in full its fiscal and economic management plans for the FFA period, plus clear economic criteria for both success and failure, before any question is put to the voters. Rocoham

Grendal, you seem to spend a lot of time and energy defending Stuart Campbell, Nicola Sturgeon et al and the statements they made during the referendum campaign on the basis that oil prices and revenues are difficult, if not, impossible, to predict. It seems that because no one was completely accurate, their assertions pre-referendum are immaterial considerations seen in today's light and that the statements they make to defend them in recent interviews are legitimate and watertight. Aside from everything Kevin and others have pointed out which shows that the forecasts in the White Paper were significantly LESS accurate than others, even if they were themselves wrong, would you not for a moment consider it a more sensible option, given Scotland's near-term fiscal future depended to an extent on how people interpreted its contents, for the White Paper to make very little of the contribution of oil to Scotland's future revenues, as they are indeed too hard to predict. Then voters could assess the more 'stable', predictable aspects of Scotland's economy and potential fiscal position post-independence and genuinely consider oil to be a 'wee (or potentially big) bonus' on top of them? Instead, oil was a critical part of the prospectus! A major gamble on a volatile source of revenue, wouldn't you say?!